Credit: Tesla

Deutsche Bank adds Tesla to its short-term “Catalyst Call: Buy” list

Written by Cláudio Afonso | | LinkedIn | Twitter

Deutsche Bank analyst Emmanuel Rosner added Tesla to the firm’s “Catalyst Call: Buy”list ahead of the company’s Q2 Earnings results on Wednesday, July 20. Deutsche Bank expects the U.S. automaker to reiterate its annual deliveries guidance of 50% growth from 2021, representing approximately 1.4 million units delivered.

Deutsche Bank Comments

“We are adding Tesla to our short-term Catalyst Call Buy List ahead of the company’s 2Q22 earnings day on July 20th, when the company could report potential upside to low Street expectations for 2Q margins, driven by good cost execution and continued pricing strength, and where we expect management to reiterate its full year deliveries growth of 50%, suggesting total volume of approximately 1.4m units and implying considerable volume ramp in the second half”.

“We believe the Street’s anticipated sequential profit deterioration of >$1.5B more than captures the large headwinds faced in the quarter, from Covid-related shutdowns in China, costs associated with closed-loop productions, and ramps in Texas and Berlin factories,” the analys wrote.

“We think the YTD 30%+ pull back in the stock largely reflects supply issues that are fast improving, providing a compelling opportunity to accumulate the stock into 2H and 2023 where volume growth and margin expansion could be meaningful. Even in the event 2Q margin misses, we think investors should take advantage of the stock pull-back to get involved given margin pressure faced in the quarter would be temporary and longer-term operating leverage stays intact,” he concluded.

Last week, Credit Suisse analyst Dan Levy reaffirmed the firm’s $1,000 price target on Tesla and the Outperform rating saying the GigaShanghai shutdown during the second quarter will pressure margin in Q2 results but also expecting a margin recovery in the second half as Tesla ramps on volume.

Recently, Tesla announced that produced 258,580 vehicles in the second quarter of which 254,695 were delivered, a decrease from the 310,048 units delivered in the first quarter. The company added that June was the highest vehicle production month in its history.

“In the second quarter, we produced over 258,000 vehicles and delivered over 254,000 vehicles, despite ongoing supply chain challenges and factory shutdowns beyond our control. June 2022 was the highest vehicle production month in Tesla’s history,” the automaker said.

Written by Cláudio Afonso | | LinkedIn | Twitter